Trucking Firm’s Troubles Reflected in IT

Editor

The 2003 merger which combined two major trucking firms, Yellow and Roadway, should have created a monster of the highway. Instead, as is often the case with large deals, the $1.05 billion merger turned into a monster headache that took years to finalize, partly because of a difficult combination of IT systems and staff. That headache continued on Friday as the company asked its creditors to help it stave off bankruptcy by amending the terms of a 2011 loan agreement. The company also skirted a bankruptcy filing in 2009.

In fact, YRC didn’t seriously get down to merging the IT systems of the two companies until 2009, allowing the two company IT staffs to work in parallel. Yellow was the leading trucking company in the niche that combines shipments of less than a full load; Roadway was No.2. George Kather, the CIO of YRC Worldwide, says new leadership in place since July 2011 forced the IT teams to merge, and worked to sweep away the remaining vestiges of cultural clashes, including conflicts over which applications, such as billing or freight management, were best. The company replaced its board of directors and CEO in July, with 30-year trucking industry veteran James Welch replacing William Zollars as CEO. Now, “there’s no more tolerance for any parochialism about the past,” says Kather, who has been CIO since 2007. Defensiveness among members of formerly separate IT staffs “is completely squelched now.”

Cultural issues were clearly a huge hurdle, but YRC also had to improve its overall performance – it posted a net loss of $409 million on revenues of $4.9 billion, at the end of 2011.

YRC Worldwide

According to Kather, the company has used new technology to turn around a pair of key financial metrics: on-time delivery and paid claims for damages to shipments. Melissa Tomlen, the company’s vice president of quality assurance, says YRC reduced average paid claims per shipment to $2.96, from more than $4 last year. “Our goal is to get it down to $2.25,” said Tomlen.

The company has also improved on-time delivery to between 94% and 95%, compared with the mid-80% range six months ago, thanks to new custom-built load planning applications. ”We’ve moved our metrics significantly by focusing on freight fundamentals,” says Kather.

The company specializes in trips of between 500 and 3,500 miles, with multiple stops along the way. Kather says the metrics improved when the company finally created a single, one-standard network and provided employees at warehouse loading docks with the right information to load trucks in the most rational manner possible. “We’ve made it easier for our workers to do their jobs right,” he said. The company completed its redesign of the network in early April.

New reporting tools have also changed the way data is reported, giving executives “greater granularity” of data. In the past, says Kather, it was difficult to identify poor performing regions and terminals because the numbers were rolled up to a divisional level. Now, executives can identify problem areas down to the truck or driver level. “We’re getting good focus on the fundamentals of the business.”

The company uses commercially available software for broad applications such as human resources. But most of the operational applications are custom-built, which is why picking one over the other became such a point of pride between the two teams. Thirty percent of the company’s applications were built by the company’s developers.

Kather said the company lost its way by trying to identify the best tool for each process. But in hindsight he realizes that “there is no best. You’re very seldom going to get a split wider than 60/40. The question is matching the technology to the key drivers [of the company] and not trying to analyze it to death.”

From the very beginning, says Kather, the company should have just picked one system — either Yellow or Roadway’s. That would have forced a data migration from one application stack to the other, but the company would have only had to do that a single time, rather than mixing and matching so-called best-of-breed systems and making sure there were interfaces so the applications could share data.

And that’s finally what the company did — although it waited until last year to do so. It picked Roadway’s IT stack, says Kather, despite the fact that Yellow had better systems overall. But in the end, the decisive factor was a single application Roadway developed that speeds customs processes for shipments coming to and from Canada. Yellow could have rebuilt a similar system, but that would have taken time, and added to the company’s financial pressure, something management really couldn’t afford. “We went with speed rather than a slightly better technical stack,” he said.

Comments (5 of 46)

There were many reasons why they went with the Roadway system,finally Zollars figured out he better go with the "old antiquated system" that was paid for,, fyi 402 employee Hollands computer system is older than Roadways and they still seem to make money,, as for you 251 employee, you must be heritage yellow,, take the money and run,, god knows your management team has taken enough from us over the last 5 years..

7:48 pm April 29, 2012

251 employee wrote:

our management at 251 are all roadway they no longer care about many ways to save the company money our overtime is very bad 10 14 hrs aday for lots of guys with no production

9:31 pm April 28, 2012

402employee wrote:

I work at YRC 402 in Atlanta i have worked their for 11 years. I have been lay-off for the past three but recently started back full time. At least on our dock where are getting some customers back and starting to move some freight again. However the decision to go with roadway system was absolutely dumb it is horrible the old yellow system IT wise was twice as good in many ways that i wont get into here. That said with the company so distressed from financial woes(Check out what the company owes the pension fund) they probably couldn't spend a dime on it to update new facilities with our software hopefully that will change soon because the company has a great group of employees who all want to see it happen!!!

Just my opinion.

8:27 am April 27, 2012

yellow? wrote:

Worked 20 years with Roadway and 3 witt YRC,, YRC is a joke,, none of their programs work,they cant figure out anything about transit times, or how to load frieght,, so since none of tha works YRC decides to have yet another major change of operations and move half of the remaing employees yet one more time.. Yellow frieght is a JOKE!!! IN 20 years at Roadway I seen 5 change of operations, 3 years since the debacle they call a merge Ive seen 3..Finally had enough and went to Holland and that was because hey put me on letter on day 1.. Belive me when I tell you this, Hollands computer system is antiquated but yet they make money,, the failures of YRC has very little to do with computers as it does the fact Yellow is a POS,, this is not a difficult job, take a skid off a trailer and put it on another so it can head down the road,, trust me Holland didnt reinvent the wheel,, but Yellow thought it could... I knew Roadway was done when Yellow bought them and started all of their "Yellow Ways"...

10:19 am April 26, 2012

GIVE ME A BREAK wrote:

X-Yellow guy Don't get me wrong my posts are just one man's opinion. At the end of the day Yellow Corp. was poorly run and it showed at Yellow Trans for sure. Roadway had thier way and Yellow had thiers.
Yellow Corp ruined many a good company. The IT system decision was just one of many bad choices YRC Corp. made. Sad.

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